alternative apportionment

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The Court of Appeals of Virginia, upholding the trial court’s decision, held that the successor to The C. F. Sauer Company could elect the manufacturer’s apportionment method for the first time on its amended tax return. By doing so, the court (preliminarily*) paved the way for qualifying taxpayers to take a wait and see approach…

On July 21, 2022, the Regular Division of the Oregon Tax Court ruled that flights operated by all members of a unitary group are included in a taxpayer’s departure ratio and that receipts for selling tickets on flights operated by third parties do not constitute transportation revenue under the state’s special industry apportionment rules for…

The California Office of Tax Appeals (OTA) recently sustained the Franchise Tax Board’s (FTB) income tax treatment of an IRC 338(h)(10) election. In return for all the outstanding stock in the target S-Corporation taxpayer, third-party buyers paid an initial (fixed) purchase price and agreed to make deferred contingent earnout payments totaling up to $50 million…

The Michigan Court of Appeals reaffirmed its March 2020 decision that application of the state’s statutory apportionment formula was unconstitutionally distortive as applied to a taxpayer’s Michigan Business Tax (MBT) liability. The Michigan Supreme Court vacated and remanded the Court of Appeals’ March 2020 decision, which was the topic of a prior SALT Shaker post…

At a March 4, 2021 meeting of the California Franchise Tax Board’s (FTB) three-member Board, FTB Staff announced on the record that a Board hearing on an alternative apportionment petition is not required to exhaust administrative remedies. The announcement was made during Staff’s recommendation to the Board to begin the formal regulatory process to amend…

On December 29, 2020, California’s Franchise Tax Board (FTB) staff announced a twenty-day comment period for four changes to the proposed draft language of its 25137 Regulation (Alternative Apportionment). After the twenty-day comment period expires, FTB staff intends to present the newly revised proposed draft Regulation language to the three member Franchise Tax Board to…

The Michigan Court of Appeals recently held that the state’s statutory apportionment formula was unconstitutionally distortive as applied to a taxpayer’s Michigan Business Tax (MBT) liability. Therefore, the taxpayer was entitled to use an alternative formula. The court noted that this is an exceptional case where the taxpayer met its burden to show that the…

The New Mexico Administrative Hearings Office determined that UPS may depart from the statutory apportionment method for trucking companies, based on mileage driven in the state, because it produces a result that bears no rational relationship to UPS’s New Mexico business activity.

Echoing a 1992 Montana Supreme Court case also involving UPS, the Administrative Hearings…

The Maryland Court of Special Appeals upheld the Maryland Tax Court’s decision holding that the State Comptroller can subject an out-of-state holding company to tax because the holding company did not have economic substance apart from its parent, which was conducting business in the state. In addition to upholding the assessment of tax, the Court…